FTC: Students scammed by diploma mill

Would-be high school graduates who got diplomas from Jefferson High School Online or Enterprise High School Online didn't make the grade.

Instead of a credential that would help them pursue college, enlist in the military or apply for jobs, the students were scammed by a diploma mill, the Federal Trade Commission said Friday.

The agency announced that a Florida federal court secretly approved a temporary order halting the business operations of several companies allegedly involved in the scheme. Signed on Tuesday, the order also temporarily froze financial assets of two people that the FTC said ran the firms.

The companies charged an as-yet-undetermined number of students nationwide $200 to $300 for diplomas, according to court filings. A preliminary review of bank records suggests the defendants took in more than $11.1 million since January 2009, the FTC alleged.

"These defendants took students' money but only provided a worthless credential that won't help their future plans," Jessica Rich, director of the agency's consumer protection bureau, said in a statement announcing the shutdown.

The targeted companies include Florida-based Diversified Educational Resources, Motivational Management and Development Services, an entity registered in St. Kitts and Nevis, and Wyoming-based IDM Services, the FTC charged in a court complaint. The Florida Attorney General's office has filed a separate state court complaint that alleged the firms were operated from Arizona.

Alexander Wolfram is the principal owner of the firms and has signature authority on their bank accounts, the FTC's complaint charged. Maria Garcia maintains the Internet domain names and is the administrator for the companies' websites, the filing alleged.

They could not be located for comment on the FTC action. No defense lawyers had officially entered the case as of Friday, said Cheryl Warner, a spokeswoman for the agency.

The alleged scheme dates back to at least 2006, according to the court complaint and other filings. The company websites claim that consumers can "become [...] high school graduate[s]" and obtain "official" high school diplomas by enrolling, the FTC charged, adding that the companies also represented that their programs were accredited.

But the companies' purported educational programs weren't accredited, and the firms lacked authorization to grant valid high school diplomas, the FTC said. Instead, applicants were required to pay a fee and successfully pass an online test to receive the promised certifications.

"As a result, defendants' 'diplomas' are virtually worthless," the FTC complaint charged. "In numerous instances," consumers who used the documents to seek jobs or enroll in college learned that the documents were "invalid."

"In numerous instances when consumers seek refunds from defendants, they are turned down," the complaint charged. The FTC urged those seeking high school diplomas to be wary of any programs that:

• Charge a flat fee for the degree.
• Offer a degree in a few months, weeks, or days.
• Require little or no course work, and no interaction with teachers.
• Issue degrees for "work or life experience" alone.

FTC attorneys have sought a permanent court injunction continuing the shutdown of the targeted companies, along with refunds, restitution and repayment of alleged ill-gotten gains. Florida U.S. District Court Judge James Cohn set a Sept. 30 hearing in Fort Lauderdale to consider the application.